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UK inflation likely to rise because of Middle East war, says Rachel Reeves

British chancellor says she will take steps to help families with cost of living as oil prices surge Middle East crisis – live updatesBritain is likely to be hit by rising inflation because of the US war with Iran, the UK chancellor, Rachel Reeves, has said, as she suggested that a “rapid de-escalation” would be the best protection against a jump in energy prices.Both the chancellor and the prime minister, Keir Starmer, suggested the government would be prepared to intervene to protect UK households against major cost-of-living shocks as oil prices surged past $100 (£75) a barrel for the first time since 2022. Continue reading...

Mar 09, 2026 &03420909202631; 17:42 UTC www.theguardian.com Trending 4/5

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Negative for markets

Sentiment score: -65/100

High impact Short-term (days)

WHAT THIS MEANS

UK Chancellor Rachel Reeves warns that Middle East tensions could drive inflation higher as oil prices surge past $100/barrel, the highest since 2022. The government signals readiness to intervene to protect households from cost-of-living shocks, indicating potential fiscal measures ahead.

AI CONFIDENCE

78% High

SENTIMENT GAUGE

NEWS POWER SCORE

AFFECTED ASSETS

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Oil (WTI Crude)

CL=FCommodity

Expected to rise

Oil prices surging past $100/barrel due to Middle East geopolitical tensions

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British Pound / US Dollar

GBPUSDCurrency

Expected to decline

Rising UK inflation expectations weaken sterling as real returns diminish

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FTSE 100 (London)

^FTSEIndex

High volatility expected

Energy sector gains offset by broader inflation concerns and potential government intervention costs

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10-Year Treasury Yield

^TNXBond

Expected to rise

Inflation expectations rising, pushing UK gilt yields higher

PRICE HISTORY

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⚡ SUGGESTED ACTION

Long energy commodities (CL=F) and defensive sectors; short GBP on inflation concerns. Monitor government intervention announcements closely as fiscal spending could further pressure sterling and increase gilt yields. Consider hedging UK equity exposure given stagflation risks.

KEY SIGNALS

Oil prices above $100/barrel for first time since 2022Geopolitical risk premium embedded in energy marketsGovernment prepared for fiscal interventionInflation trajectory shifting upwardCost-of-living crisis re-emerging as policy concern

SECTORS INVOLVED

EnergyConsumer DiscretionaryUtilitiesFinancial Services

Analysis generated on Mar 10, 2026 at 00:52 UTC

Disclaimer: This analysis is generated by artificial intelligence for informational purposes only and does not constitute financial advice, investment recommendation, or solicitation. Original reporting by The Guardian Business. Always conduct your own research and consult a qualified financial advisor before making investment decisions.

UK inflation likely to rise because of Middle East war, says Rachel Reeves

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